Franchises hold plenty of appeal for those looking to start a new business, and with thousands of franchises operating in Australia, there is an abundance of choice when it comes to the type of business you wish to purchase. However, while some franchise models are highly successful, there are no guarantees. Here are five questions to ask before becoming a franchisee.
1. How established is the franchise brand?
Trying to get your name out there and bring on new customers can be hard for a new business. Being part of a franchise with an established name means you have the benefit of an existing customer base that already knows and engages with the brand. If you’re considering joining a franchise that doesn’t have a well known brand, ask the franchisor how they will help their franchisees market themselves and grow their customer base.
2. How much will it cost you?
Starting a new business typically requires some financial outlay, but with a franchise you tend to have less control. While in your own business you can choose when and how you spend your money, in a franchise it’s often pre-established. After the initial upfront franchising cost, you may have to pay other ongoing fees for things like marketing and royalties. Seek financial advice before you sign on the dotted line to understand exactly what it will cost you to join the franchise – now and in the future.
3. What kind of support is offered?
Going into business for the first time can be daunting. A major advantage of being part of a franchise is the ongoing training and support that’s provided as part of the package. Having head office on call and access to the knowledge and experience of other franchisees within the network can help when issues arise. Find out exactly how much training and support your franchisor is willing to provide on a regular basis.
4. Are systems and processes already in place?
A big challenge of setting up a new, independent small business is developing and implementing the best systems and processes for it to run effectively. Becoming a franchisee means that the hard work is done, with systems already in place and processes tried and tested. The flip side? You might not like how things are done and could run into some trouble if you want to do it your own way. Ask yourself, are you willing to play by the rules?
5. How much input can you have?
From the store’s layout to the products and services you offer, and marketing and management responsibilities, most franchises have set rules in place that can’t be altered. This is appealing to potential owners looking for a ready-made model to buy into, however, it could be frustrating if you’re an innovative entrepreneurial type who hoped to have some input into how their business operates. Talk about this with your franchisor so you can understand from the get-go exactly how much freedom you have.
Opening a business – whether it’s your own or part of a franchise – comes with its own set of pros and cons. Do your research, get legal and financial advice on franchise contracts, and speak to other franchisees in the network to decide if franchising is right for you. For more tips and insights on starting a new business, check out these resources.